Nuvama Institutional Equities upgraded Firstsource Solutions Ltd (FSL) following the company's mixed March quarter (Q4 FY26) performance, while lowering its 12-month target price. The brokerage upgraded the stock to 'Buy' while lowering its target price.

Nuvama said Firstsource reported constant currency (CC) revenue growth of 3 per cent quarter-on-quarter (QoQ) and 11.6 per cent year-on-year (YoY), missing its estimate of 4.1 per cent CC QoQ growth. EBIT margin came in at 12.2 per cent, up 30 basis points (bps) QoQ and broadly in line with estimates.

"Management gave FY27 revenue growth guidance of 10–13 per cent CC YoY (including 2 per cent inorganic) with strong EBIT margin guidance of 12.25–12.75 per cent," the brokerage stated.

"Firstsource's double-digit revenue and strong margin guidance set the platform for a +25 per cent/+20 per cent earnings growth in FY27 and over FY26–28. We are raising FY27E/28E EPS (+3.4 per cent/+3.1 per cent) on higher margins and USDINR (93 versus 88). Upgrade to 'BUY' with a TP of INR320 (from INR350) valuing it at 20x FY28 PE (earlier 23x). Post-sharp correction, the stock is available at attractive valuations of 18x FY27 PE," it added.

Meanwhile, Anand Rathi maintained its 'Buy' rating on the stock, citing strong top-line growth in Q4 FY26 aided by consolidation of the Telemedik acquisition.

The brokerage highlighted that Q4 operating EBIT margin rose 40 basis points sequentially to 13.2 per cent, while FY26 margin expanded 140 bps YoY to 12.3 per cent.

According to Anand Rathi, margin improvement was driven by automation and AI-led efficiencies, higher offshoring and nearshoring, and AI-enabled workflows, partly offset by hiring higher-paid AI-skilled talent.

"Deal wins remain strong with 4 large deals in each of the last 5 Qs with deal pipeline now highest ever at $1bn+. FSL is evolving from its 'UnBPO' theme to 'Intelligence that Operates,' as it tries to occupy the white space between AI platform vendors & traditional IT services firms, by embedding deep domain expertise into its agentic systems with outcome accountability in regulated industries," it stated.

Anand Rathi has assigned a one-year target price of Rs 315 on the stock.